Five Hidden Growth Opportunities for U.S. CMOs to Win in 2017
This article authored by Isaac Mizrahi, Co-president and COO of Alma, originally appeared on FORBES.COM.
The “Long-Tail Economics” concept was created a couple of years ago by Chris Anderson, former Wired magazine editor and, until today, it’s one of the best descriptors of the impact the digital revolution has had on the business world. In his own words, Anderson defines the term as follows:
“Our culture and economy is increasingly shifting away from a focus on a relatively small number of ‘hits’ (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail.”
In our opinion, we could identify a similar pattern in today’s U.S. multicultural market, where what was once considered to be a “niche” opportunity like the U.S. Hispanic population today is 59 million strong, generating purchase power levels north of $1.5 trillion a year.
While some advertisers still question whether it is worth having dedicated efforts toward this growing segment, progressive and innovative brands are already looking into new “niche sub-segments” within the Hispanic segment as well as opportunities that have become attractive enough on their own, thus repeating the concept of “Long-Tail” marketing.
The risks of not considering these sub-segments may not only be felt by missed sales and decline in market share, but waiting too long to engage these groups may mean spending more in the future when their preferences may already be fully established.
American CMOs looking for incremental growth in 2017 should consider these five sub-segments as they put their final touches on their marketing plans. Below is a brief description of the opportunities based on our analysis using Simmons Research, among other additional sources:
Hispanic Millennials – Opportunity: 19 Million
At 75 million strong, U.S. millennials represent one of the most coveted segments in today’s marketplace. However, when it comes to ethnicity and cultural affinity, considering this segment cohesive and uniform could be a costly mistake.
Almost 25% of all U.S. millennials are Hispanic, and these consumers, while displaying similarities with other non-Hispanic millennials when it comes to attitudes and behaviors, also demonstrate a strong connection to the Latino culture. For marketers, when these cultural nuances are in play, unique marketing opportunities are created.
For example, Hispanic millennials tend to over-index non-Hispanic millennials when it comes to paying more attention to commercials, they over-index their non-Hispanic peers on their desire to have their own business one day, they tend to build a family and have kids at a relatively young age, and they tend to also over-index on purchases such as clothing, apparel, grooming essentials and alcoholic beverages.
Non-Mexican Hispanics – Opportunity: 19 Million
While the majority of U.S. Hispanics are of Mexican origin, non-Mexican Hispanics represent almost 1/3 of the total U.S. Hispanic population, and this growth outperforms the Mexican-Hispanic population (19% vs. 13% growth in the past 5 years).
This group is mostly foreign-born (63%) and comes mainly from Puerto Rico (almost 6 million). Recently, it has seen a significant growth from South American countries, including Venezuela, Colombia and Brazil.
This is an interesting sub-segment for many reasons, including its geographic concentration (mostly on the East Coast with additional population pockets in Chicago and California), their fully bilingual capabilities, and their strong consumption of digital media.
According to Simmons Research, this sub-segment has higher disposable income and tends to spend more than Mexican-Hispanic consumers, representing a significant opportunity for several categories. As an example of their slightly different behavior nuances, uncovered by studying the “Hispanic Long-Tail,” when it comes to alcoholic beverages, non-Mexican Hispanics tend to prefer whiskey, wine, and cognac to tequila.
The Hispanic 55-year-old+ Population – Opportunity: 7 Million
While almost every demographic statistic about U.S. Hispanics over the past 40 years confirms that the segment is “very young,” with the average age of Hispanics in the U.S. in the low 30s, most people forget that a 37-year-old Hispanic who was enjoying Ricky Martin’s “Living La Vida Loca” back in 1999, will be celebrating his 55th birthday next year.
Don’t get me wrong, the U.S. Hispanic population will still bring down the average age of Americans based on its relative youth, but the number of U.S. Hispanics over 55 will keep growing, and marketers shouldn’t ignore this sub-segment.
While concerned about their economic stability in the present and in the future, this is a group that has significant influence on young Hispanics when it comes to keeping the cultural connection to their Hispanic roots. They are also key influencers in multi-generational households.
For example, some relevant categories where this sub-segment tends to over-index vs. their non-Hispanic peers are seen in casual dining and personal items, such as colognes and perfumes.
Hispanics with Household Income above $100K/Year – Opportunity: 7 Million
One of the most common comments about targeting U.S. Hispanics goes like this: “I understand the significant population growth, but this is a low-income segment, they don’t have the purchase power my brand is looking for.”